Published July 02, 2013
The Wall Street Journal said Tuesday afternoon that Hess is seeking a price in the low single-digit billions of dollars for its approximately 1,361 gas stations, which are located in several eastern states. More than 90% of the stations are company operated and include convenience stores.
Hess declined to comment on the report.
The convenience stores could help sell the Hess stations, given that products like soda and cigarettes generally command higher margins than gasoline and diesel.
Credit Suisse analysts recently said the value of Hess’s stations is about $2.5 billion, but the chain could fetch as much as $3.4 billion. Morningstar analyst Stephen Simko values the business at around $1.2 billion.
The New York-based company is in the midst of a transformation into a pure-play exploration and production company, shedding its so-called downstream businesses of transporting oil, refining and retail.
Hess has turned its attention to extracting oil and natural gas from the ground, looking to capitalize on the boom in production at U.S. shale formations.
In March, Hess said it intended to divest its gas stations as part of a broader restructuring, but the company didn’t specify whether it planned to sell them outright or spin them off as a separate business. Valero Energy (VLO) recently spun off its retail unit, now called CST Brands (CST).
The Journal noted that despite hiring Goldman, one source familiar with the matter said Hess could still choose to pursue a spinoff.
Last month, Hess bought the 56% stake it didn’t already own in WilcoHess, a joint venture with A.T. Williams Oil. WilcoHess includes about 400 gas stations and travel plazas in the Southeast.
Sources told the Journal that acquiring the remaining stake in WilcoHess will allow Hess to more easily sell or spin off its retail arm.
Shares were up 56 cents at $67.27 in early afternoon trading.